BERLIN/FRANKFURT When Tino Blaesi joined the solar sector gold rush, he thought his career was made. Seven years later, he is looking for a job outside the industry after his company slashed more than a third of its workforce in one day.

Workers in Germany's once booming solar energy industry face a shakeout of major proportions following declines in the price of solar panels over the past year.

Cuts in subsidies for solar energy, weaker demand for panels and fierce competition from cheaper Asian rivals are eating into what was once the world's biggest hub for the production of solar cells, taking the shine off an industry that was effectively born in Germany.

A decision by the German government earlier this year to phase out nuclear energy has done little to reignite the sector. The resulting power gap is likely to be filled by coal and gas rather than solar and wind energy.

"I don't want to work in this sector anymore, I'm sick and tired of it," said 44-year old Blaesi, who worked for seven years at Vogt Group, a German support services firm that deals with the planning and logistics for solar plants.

Vogt had some 160 employees in its heyday in the mid 2000s, Blaesi said, but has shriveled as the young industry matured. It was forced to carry out a large round of lay-offs earlier this year after price declines and weaker demand dampened growth.

Subsidies, or so-called feed-in tariffs, through which operators of solar panels receive a guaranteed price for the electricity they generate, made Germany the world's largest solar market and had created 150,000 jobs by 2010.

But over the past two years, Germany has sharply reduced the tariffs, and a recent proposal to limit subsidies for new solar installations may seal the industry's fate.

Now, German solar companies are either laying off staff or putting them on reduced working hours. The contrast with the broader economy is stark. Overall, German unemployment has steadily declined in recent years as Europe's biggest economy outperforms its rivals in Europe.

Since the end of last year, roughly 5,000 companies involved in the solar business have shut up shop, shedding about 20,000 jobs, according to German solar industry group BSW.

BIGGEST CASUALTY

Berlin-based Solon, Germany's first solar energy company to go public, said late on Tuesday it would file for insolvency, becoming Germany's biggest casualty so far.

SMA Solar, Germany's top solar group, said last month it would lay off up to 1,000 temporary workers by the end of the year, citing weak demand for its invertors, a vital piece of equipment in solar systems.

"It's the worst year the industry has seen in its short history," Andreas Haenel, chief executive of German solar company Phoenix Solar said.

The bloodletting is particularly bitter since most of the industry's jobs are located in the formerly communist eastern part of the country, a region that has suffered from an exodus of young, educated people for two decades.

The area around Bitterfeld-Wolfen, about an hour's drive southwest from Berlin, was a major beneficiary of Germany's solar boom. A location for solar cell production, it became known as "Solar Valley".

Andreas Kind recalls the stability that existed before German reunification when the region used to be the hub of former East Germany's polluting chemicals industry.

Since then, he has been forced to jump from job to job. First the power plant where he worked was decommissioned. Then a few years later a building materials factory he joined was torn down and rebuilt in Poland, where wages are lower.

When he signed up with German solar company Q-Cells in 2005, he thought the rocky ride was over. Back then, Q-Cells was the world's largest maker of solar cells. In mid-November the company said it would lay off 250 employees. It has also warned that it might not be able to repay a convertible bond due in February 2012.

"People are afraid they could lose their jobs. Many have passed a critical age for finding a new job, including me," 50-year-old Kind said.

"The nuclear exit meant an energy shift for Germany. But where's the solar piece of the cake?"

THE CURSE OF GLOBALISATION

Legislation introduced a decade ago by a centre-left coalition of Social Democrats and Greens led by then-Chancellor Gerhard Schroeder offered generous incentives and turned Germany into the world's largest market for solar panels, sparking thousands of start-ups, some of which became global leaders.

But the incentives, because they were focused on energy production rather than panel manufacturing, also benefited cheaper Asian rivals, which elbowed their way into the market and drove down prices.

Companies in China and Taiwan have dislodged their German peers as the world's biggest suppliers of solar cells.

This has caused a major geographic rift in the industry. The U.S. International Trade Commission earlier this month approved an investigation into charges of unfair Chinese trade practices in the solar energy sector, ratcheting up tensions with Beijing on the green trade front.

The crisis has led to a wave of bankruptcies in the United States, notably of panel maker Solyndra LLC, showing that European solar players are not the only ones suffering from the industry glut.

"Considering the large direct financial support and the indirect help due to exchange rates, it's hard to see this as a level playing field," said Carsten Koernig, managing director of BSW, referring to Asian rivals.

Q-Cells had to take massive writedowns this year for cutting production at expensive European plants, while peer SolarWorld shut down production at one of its U.S.-based solar plants to save costs.

Industry analysts say the shakeout in the German solar sector is unlikely to kill it off altogether. But it will force uncompetitive companies out of the market and push those that remain to lower their costs more rapidly.

"There is clear overcapacity across the whole solar value chain, and we believe many companies may go out of business over the next year," Jefferies Equity Research analyst Gerard Reid said.

In the long run price declines will be healthy for an industry that relies on government subsidies and wants to become cost-competitive with fossil fuels.

In the meantime, though, workers lured into the sector by its promise will leave disillusioned and empty handed, and Germany will lose some know-how, one of its key resources.

Vogt's Blaesi says some of his colleagues are heading for southern Germany where there are more jobs to be had in the engineering sector, while others are moving to work for more thriving solar firms abroad.

"It's a shame because that know-how is disappearing now, many people are no longer working in solar energy because there are fewer jobs and others are emigrating," he said.

LIMA An indigenous federation opposed to a recently approved plan for oil drilling in the Peruvian Amazon said on Friday that native communities will physically block any attempt by oil companies to operate on their lands.

TOKYO Japan's government on Friday nearly doubled its projections for costs related to the Fukushima nuclear disaster to 21.5 trillion yen ($188 billion), increasing pressure on Tokyo Electric Power (Tepco) to step up reform and improve its performance.

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